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athenahealth (ATHN) Reaffirms 2016 View, Guides for 2017
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Headquartered in Watertown, MA, athenahealth Inc. reaffirmed its full-year 2016 guidance and issued a stable view for 2017. Notably, shares of athenahealth followed the lackluster market trend and dropped almost 2.2% to close at $94.37 following the news release.
The stock represents a negative year-to-date return of almost 41.4%, wider than the loss of the Zacks categorized Medical Information System sub-industry’s 27.4% and the S&P 500’s 35.2%. However, a long-term expected earnings growth rate of 26.67%, and a projected sales growth of 18.92%, compared with the industry’s 18.44% instills some confidence in investors.
Meanwhile, the estimate revision trend for the stock has been mixed as one estimate moved north and one moved south in the last two months. Notably, the current year estimate for the stock stands at 76 cents per share.
For 2016, athenahealth expects total revenue at the range of $1.085–$1.115 billion. Adjusted earnings are estimated in the band of $1.65–$1.85 per share. The adjusted operating income is expected between $120 million and $135 million while adjusted gross margin is projected in the band of 63.5% to 64.5%. The adjusted tax rate is expected to be around 40%.
For 2017, the company affirmed total revenue at the range of $1.290–$1.330 billion. GAAP operating income is estimated in the $61–$81 million range. The adjusted operating income is expected between $170 million and $190 million. Annual bookings are expected in the range of $400–$450 million.
Going forward, the company’s foothold in the cloud-based health solution market makes us optimistic about the company. In this regard, the global Healthcare Information Technology (HCIT) market by product is expected to reach a worth of $228.7 billion by 2020, growing at a CAGR of 13.4% (Markets And Markets).
We are also upbeat about athenahealth’s unique business model, which makes it a strong niche provider of revenue cycle management (RCM) services to small physician practices.
Of the other recent developments, athenahealth was added to Boston Globe’s 2016 list of "Top Places to Work" recently. The Boston Globe is an American daily newspaper.
On the flip side, a low bookings rate, lack of enterprise-sized deals and intensifying competition in the HCIT market are the major headwinds, at least for the near term.
Zacks Rank & Key Picks
Currently, athenahealth carries a Zacks Rank #3 (Hold).
Sucampo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.69 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 35.55%.
Vanda’s loss estimates narrowed from 62 cents to 52 cents for 2016, while its earnings estimates increased from 13 cents to 22 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 73% year to date.
MannKind’s estimates narrowed from loss of 24 cents to earnings of 12 cents for 2016 over the last 60 days. For 2017, loss estimates narrowed from 14 cents to 9 cents over this period. The company posted a positive surprise in two of the four trailing quarters with an average beat of 103.33%.
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athenahealth (ATHN) Reaffirms 2016 View, Guides for 2017
Headquartered in Watertown, MA, athenahealth Inc. reaffirmed its full-year 2016 guidance and issued a stable view for 2017. Notably, shares of athenahealth followed the lackluster market trend and dropped almost 2.2% to close at $94.37 following the news release.
The stock represents a negative year-to-date return of almost 41.4%, wider than the loss of the Zacks categorized Medical Information System sub-industry’s 27.4% and the S&P 500’s 35.2%. However, a long-term expected earnings growth rate of 26.67%, and a projected sales growth of 18.92%, compared with the industry’s 18.44% instills some confidence in investors.
Meanwhile, the estimate revision trend for the stock has been mixed as one estimate moved north and one moved south in the last two months. Notably, the current year estimate for the stock stands at 76 cents per share.
For 2016, athenahealth expects total revenue at the range of $1.085–$1.115 billion. Adjusted earnings are estimated in the band of $1.65–$1.85 per share. The adjusted operating income is expected between $120 million and $135 million while adjusted gross margin is projected in the band of 63.5% to 64.5%. The adjusted tax rate is expected to be around 40%.
For 2017, the company affirmed total revenue at the range of $1.290–$1.330 billion. GAAP operating income is estimated in the $61–$81 million range. The adjusted operating income is expected between $170 million and $190 million. Annual bookings are expected in the range of $400–$450 million.
Going forward, the company’s foothold in the cloud-based health solution market makes us optimistic about the company. In this regard, the global Healthcare Information Technology (HCIT) market by product is expected to reach a worth of $228.7 billion by 2020, growing at a CAGR of 13.4% (Markets And Markets).
We are also upbeat about athenahealth’s unique business model, which makes it a strong niche provider of revenue cycle management (RCM) services to small physician practices.
Of the other recent developments, athenahealth was added to Boston Globe’s 2016 list of "Top Places to Work" recently. The Boston Globe is an American daily newspaper.
On the flip side, a low bookings rate, lack of enterprise-sized deals and intensifying competition in the HCIT market are the major headwinds, at least for the near term.
Zacks Rank & Key Picks
Currently, athenahealth carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include MannKind Corporation (MNKD - Free Report) , Sucampo Pharmaceuticals, Inc. and Vanda Pharmaceuticals, Inc. (VNDA - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sucampo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.69 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 35.55%.
Vanda’s loss estimates narrowed from 62 cents to 52 cents for 2016, while its earnings estimates increased from 13 cents to 22 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 73% year to date.
MannKind’s estimates narrowed from loss of 24 cents to earnings of 12 cents for 2016 over the last 60 days. For 2017, loss estimates narrowed from 14 cents to 9 cents over this period. The company posted a positive surprise in two of the four trailing quarters with an average beat of 103.33%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>